Should I get a fixed rate or the variable rate loan?

It depends on your circumstances and your outlook. Fixed rates are usually a little higher than variable rates so you have to weigh up the alternatives ie comparative cost of each option, the requirement you have for certainty in your repayments, what you believe rates will do in the future, and the question of how long to fix for. Fixed rates have the benefit of giving you full knowledge of what you repayments will be over the term you fix however they also have a number of disadvantages. These include:

1. there is limit to the amount of extra repayments that can be paid off the loan each year. This is limited to 20K over your agreed repayments
2. there may be significant break costs if you have to break the fixed rate period before its expiry date ie if you decide to refinance or sell the security property
3. the fixed rate is usually set at time of settlement - not at the time the rate is quoted to you at the beginning of the arrangement of the loan

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